Pictured: Alastair McChesney
Rent levels for office space in the Midlands are likely to
remain static for the whole of next year and beyond according to
new research from national commercial property firm Lambert Smith
Hampton (LSH).
LSH's National Office Market Report predicts that it will be
2013 before rents for office space will show any growth. At that
point pressure on supply could trigger rental growth. Until then,
rental growth will be restricted to Central London and parts of the
South.
Availability levels have remained high in the Midlands, although
prime office space continues to be limited and most availability is
of lower grade stock. With the continued low level of market
activity, availability has crept up and is close to the market
highs of 2009.
The LSH report also confirms fears that the region will face a
shortage of Grade A office space in the coming years as demand
outstrips supply. In Birmingham there is only 300,000 sq ft of
space available, but both the city centre and out of town markets
are oversupplied with secondary and tertiary stock. In Nottingham
the same is true, with the market being oversupplied with secondary
and tertiary space.
Prime rents in Birmingham have declined by some 15 per cent
during the recession, while holding up in Nottingham and Leicester.
However rents for non-prime space outside Birmingham have fallen
due to depressed market conditions.
Lease incentives, which amount to between two and three years
rent free on a 10 year lease, should start to reduce next year,
providing there is a general improvement in market conditions
Alastair McChesney, Agency Director in the Birmingham office of
LSH said, "The office sector in the region has undoubtedly felt the
impact of difficult market conditions over the last two years.
We've seen a limited appetite for speculative development,
regeneration schemes stalling due to lack of investor confidence
and public sector grant support, and an abundance of vacated
second-hand stock. While take-up of office stock has fallen short
of the long term average, supply has remained relatively stable,
yet has been largely second-hand space."
For more information about Lambert Smith Hampton, please visit
their website here: www.lsh.co.uk